The UK and European Commission have today signed off a three-year delay to laws that would have imposed tariffs on certain UK-exported and imported vehicles.
Due to be rolled out on 1 January 2024, the 'rules of origin' legislation will now not come into force until 1 January 2027. These rules, created as part of the Brexit negotiations, require 45% of the value of an electric vehicle (and 60% of the battery pack) to have originated in the UK or EU.
Firms whose vehicles don't meet these standards will be fined as much as £3400 per imported EU-made EV and £3600 per exported UK-made EV – the equivalent to a 10% duty. These prices are expected to be passed on to the consumer.
As part of the new Trade and Cooperation Agreement, a clause has been added that cements the new date and prohibits it from being extended further.
The now-confirmed delay comes in response to growing concerns by the UK government and its European automotive industry backers. They had argued that the rules would heap excessive costs on an industry already pumping great sums into future EV tech.
To dispel financial concerns, the Commission has also confirmed that a three-year, €3 billion fund to boost the EU's battery manufacturing industry will be included in the deal. This will be split between the continent’s “most sustainable battery manufacturers”.
It said: “This will create significant spillover effects for the entire European battery value chain, notably its upstream segment, as well as support the assembly of electric vehicles in Europe."
Delay backed by industry
The industry has welcomed the proposals, with Society of Motor Manufacturers and Traders boss Mike Hawes, who previously called for the three-year delay, saying it “is a win for motorists, the economy and the environment”.
He added: “Maintaining tariff-free trade in EVs will ensure consumers retain the widest and most affordable choice of models, at a time when we need all drivers to make the switch.
“Governments have listened to the sector and acted to safeguard the competitiveness of the EU and UK automotive industries and give the Anglo-European battery industry the critical time it needs to catch up.
“The measure will help cut carbon, support growth and jobs, and is the right decision for the decarbonisation of road transport."
Meanwhile, the European Automobile Manufacturers’ Association has called the delay “much needed”.
Director general Sigrid de Vries said: “The long-awaited deal to extend rules of origin by three years provides much-needed certainty to Europe’s growing electric vehicle battery supply chain.
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